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Abu Dhabi, UAETuesday 18 December 2018

Chinese internet major Tencent's profit tops forecasts

“Tencent’s existing games and pipeline continue to draw new gamers and revenue,”

WeChat mascots inside Tencent's office in Guangzhou. The Chinese firm has beaten forescasts. Bobby Yip / Reuters
WeChat mascots inside Tencent's office in Guangzhou. The Chinese firm has beaten forescasts. Bobby Yip / Reuters

China's internet juggernaut Tencent posted quarterly profit that beat analyst estimates after the company’s strategy of bulking up on entertainment content and mobile games paid off.

Net income climbed to a record 18.2 billion yuan (Dh9.91bn) in the three months ended June, the Shenzhen-based company said. That compares with the 13.5bn-yuan average of analysts’ estimates compiled by Bloomberg. Sales were 56.6bn yuan, topping projections for 52.9bn.

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Tencent profit soars as Chinese tech major wins on smartphone games

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Tencent’s market valuation is near record highs, fuelled by expectations it will continue to tap the spending power of 200 million gamers on Honour of Kings and deliver more mobile hits. The still-nascent advertising and finance business on instant messaging app WeChat has also boosted investors’ confidence it can compete with ad-leader Alibaba and sustain growth.

“Tencent’s existing games and pipeline continue to draw new gamers and revenue,” said Morgan Stanley analysts led by Hong Kong-based Grace Chen ahead of the results release. They also foresee “strong growth potential in performance advertising and surging revenue growth in the payments business.”

Its shares rose 1.4 per cent to HK$323.20 in Hong Kong Wednesday. The stock has gained 70 per cent this year, compared with an 80 per cent rise for New York-listed Alibaba.